Bill Gross warned that investors were coaxed into “dreamland” by the central bank
The global central bank has decided to continue to boost the world economy. Although the world economy has rebounded sharply from the pandemic, investors are living in a “dreamland”. Bill Gross Say.
The historically low interest rates and huge bond purchase plans are only now being carefully scaled down, which has triggered a wide-ranging financial frenzy in various fields from stocks to digital assets.Irreplaceable tokens“, the founder of bond investment group Pimco said in an interview with the British “Financial Times”.
“It’s dangerous,” Gross warned of the central bank’s easing policy. “All this is supported by interest rates that shouldn’t be reached.”
The U.S. inflation rate that has exceeded the Fed’s expectations has accelerated to Three years high It was 6.2% in October. The price growth of other global economies, including the United Kingdom, has also far exceeded the target. This has heightened concerns that the central bank will need to act faster and more aggressively than previously stated.
Gross’ comments on the financial boom echoed the call of Deutsche Bank’s chief executive Christian Sewing, who said on Monday that central banks should Tighten monetary policy Provide “countermeasures” to cope with soaring inflation.
Gross, now retired, said he doubts that inflation will remain so high or accelerate further. However, he predicts that in the foreseeable future, it may be much higher than the Fed’s 2% target.
Nevertheless, Gross questioned Federal Reserve And other central banks will—and even can—significantly tighten monetary policy to curb financial excesses and inflationary pressures because of the risk of causing market damage that could endanger economic recovery.
“There is nothing they can do,” he said. “I think [Fed chair Jay Powell] Restricted by the financial market, he will gradually withdraw from buying bonds, and he may gradually raise interest rates next year. ”
Although inflation rates in most major countries have risen due to supply chain disruptions and a strong economic recovery from the Covid-19 shock, the global bond market has remained largely calm.
As investors began to price the possibility or possibility of raising interest rates, short-term government bond yields have soared in recent weeks, but long-term yields have basically remained close to historically low levels.
“Recent inflation data may scare the’inflation fighters’… BlackRock fixed income chief investment officer Rick Rieder said last week that this may force central bank officials to at least discuss the year-to-date comparison. Slow response function and faster response function. “However, over time, the distortions and extreme fundamental effects of the pandemic may be alleviated,” he added.
The 10-year benchmark Treasury bond yield rose slightly due to the strong U.S. inflation data released last week, but it is still at an abnormally low level of around 1.6%, indicating that many Bond investor Still believe that the current inflation rate is a peak that will eventually pass.
But Gross – who now mainly manages the funds of his own foundation – is still worried about the long-term impact of the monetary experiments of the past ten years of low and even negative interest rates and the large-scale bond purchase program that has now totaled $23 trillion since 2008.
Gross said that long-term low interest rates have caused serious pain for savers. “On a certain day, a certain year, or a certain day in these decades, the system will collapse because capitalism depends on the saving and investment of savers.”
The reporter of this story can be reached at [email protected] and @robinwigg on Twitter